0
0
Is Pakistan running by Sri Lanka? Extensive macroeconomic indicators for the two countries show similarities in the economic prospects of the two countries in the sub-euan.Mental in the political crisis, Sri Lanka also faced a large -qualified external debt crisis. Need loans to accelerate the infrastructure and energy sector, but failed to get a return of investment. According to Sri Lanka’s central bank data, for debt and external obligations of $ 51 billion, he must pay around $ 4.5 billion per year to 2025 as a debt service (principal + interest) from his foreign exchange reserves.
The island nation is also very dependent on imports, with about 40% of the difference between import and export rates. This basically means that the state needs additional foreign exchange reserves to ensure the supply of important goods from abroad. With the increase in debt service every year, coupled with a decrease in large foreign currency recipients, tourism and money sending, Sri Lanka has less than $ 2 billion in foreign currency reserves. In May, the country only had $ 50 million foreign currency reserves that could be used which was not even enough to regulate imports for a day. The rapid decline in the economy saw Sri Lanka failed to pay on external debt in May.
Pakistan faces the same crisis. The country has a large external debt of around $ 130 billion. In FY21, according to the state bank of Pakistan (SBP), the country paid $ 13.424 billion in debt service. For three fiscal quarters in 2022, the number has crossed $ 10,885 billion and is expected to reach more than $ 14 billion.Like Sri Lanka, Pakistan is also an economy that depends on imports but to add problems, export-import gaps are very large and the condition becomes more dangerous when there is a crisis that will soon occur in the foreign exchange reserve front front. The country’s forex reserves have been reduced to only around $ 9 billion, enough for only six to seven weeks of imports.
In the fiscal year 2021, in accordance with the number of Pakistani state banks, the country’s exports were worth $ 25.639 billion while imports were much higher at $ 54,273 billion, a large gap of almost $ 30 billion. For the fiscal year 2022, even higher at $ 40 billion dollars, with imports at $ 72,048 billion and exports at $ 32,450 millons. In June 2022, the country’s imports were worth $ 7.038 billion against $ 3,118 billion export figures.
The next quarter will be important for the country with the economic calculation piled on it, especially after the decision to raise the prohibition of unnecessary and luxurious items under the pressure of several political elites and importer lobbies. Import rates can rise, increase pressure on the decline in foreign currency reserves.The only solution to this problem is to take more loans and efforts to restructure the existing debt payment options.
Pushan Dutt, Professor of Economics and Political Sciences in Insead, Singapore thinks that even though the current economic crisis in Pakistan is truly in a difficult condition, this country can avoid the fate of Sri Lanka, thanks to the geopolitical reasons, India -Chinese and Pakistan -ti -TI -competition China Connect. “While the level of debt in absolute terms is the same as Sri Lanka, the Pakistani economy is greater, so that the ratio of debt to GDP is smaller. At the same time, this country has a lot of foreign currency loans and we have seen examples of previous capital flights. Now a lot of debt is held by China so that it might get debt assistance due to geopolitical reasons, “he said.
GDP 2021 Pakistan, according to the World Bank Dataset, is $ 339.4 billion at US $ 2015, almost four times higher than Sri Lanka’s GDP of $ 92.1 billion. The debt ratio to Pakistani GDP is still below 100%. That was 84% in 2021, the appropriate data from the trade economy said, while the IMF analysis said the ratio of debt to Sri Lanka GDP reached 119% in 2021.
Average Rating